Minimum Wage in Malaysia

Topics: Minimum wage, Wage, Employment Pages: 9 (3576 words) Published: January 6, 2012
Minimum wage in Malaysia: need for it and its’ possible effectiveness 1.0.Introduction
Background Information
There has been growing debates concerning the minimum wage in Malaysia, with strong opinions from both sides of the arguments. In 1979 edition of their introductory textbook, William B. Aumol and Alan Blinder explained, “The primary consequence of the minimum wage law is not an increase in the incomes of the least skilled workers but a restriction of their employment opportunities” (p.47). On the other side of the debate, social activists, policymakers and other non-economists often argue for an increase in the minimum wage. Advocates of the minimum wage have included Franklin D. Roosevelt, Martin Luther King, A. Philip Randolph, Walter R. Reuther, Edward Filene, Beatrice and Sydney Webb. Finally, Malaysia took its stance and made its first legislative attempt at putting in place a national minimum wage on twenty first June 2011 .Introduced by Human Resources Deputy Minister, Maznah Mazlan in Parliament, the National Wages Consultative Council (NWCC) bill was tabled for its first reading. Most significantly, the general public does not widely share the negative opinion of the minimum wage, according to surveys. What questions us, is whether there is a need for minimum wage, and if there, how effective it might be. Statement of the Problem

This paper will investigate on the need and the effectiveness of the yet to be minimum wage bill among security guards, cleaners with its current value of RM720. The idea of having a national minimum wage in Malaysia has been proposed more than 12 years ago by the Malaysian Trades Union Congress (MTUC), when Tun Mahatir was still the Prime Minister, and has been continuously rejected, until more recently, the current prime minister, Datuk Seri Najib has stated in the Malaysia Budget 2011 speech “Businesses must embrace the minimum wage as a business strategy”. A minimum wage theoretically, is planned to affect the low-skilled workers such as janitors, cleaners and security, who are paid with low wages which affect their standards of living. With a minimum wage in effect, they were supposed to be able to raise their standards of living and live a more comfortable life. Conversely, Orrenius and Zavodny (2008) and Ragayah Haji mat Zin(2007) argue that the effect of a minimum wage may just put these low skilled workers out of employment because of economic conditions in country, putting the low-skilled workers in an even worse situation: unemployment. Research Purpose

This paper aims to investigate whether or not Malaysia is in need for implementation of a national minimum wage, based on the reviews of recent developments in the literature pertaining to the overall effects of a minimum wage, and the opinions of the janitors, cleaners and security guards. The focus is on the perceptions of low-paid workers as mentioned earlier and their satisfaction with the amount they are being paid and whether or not it covered their day to day expenses. Analysis can be made on whether or not these workers were exploited by the absence of a minimum wage and that a minimum wage is indeed can end such situations. To answer the questions surveys will be done and literature review will be made that will analyze on how are salaries are appointed and later on the consequences of implementing the minimum wage. This paper aims to answer the following questions: 1)Is there any need for Malaysia to implement national minimum wage? 2) As for now are low-paid workers are paid enough to cover their daily expenses? 3)Does the law bring a tangible change?

Significance of the Study
There are lots of studies pertaining to the issue of minimum wage around the globe, however, only few had focused on the issue being practiced in Malaysia, like Rohayu Abd. Ghani in her article” Salary and Wages in Malaysia” and David Lim in his article “”Sweet Labor” and Wages in Malaysian Manufacturing” .Referring to the...
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